Are home warrenties worth the money? Some people swear by them. I personally swear at them.

Home warrenties are an insurance policy that covers many items in your home. They cost about $400/year. When something breaks down, you call their 800 number and they send someone out to try to fix it. Usually you pay a $50-$70 trip charge, kind of like a deductible.

They say they will either fix the problem or replace it. Sounds pretty good. Especially since they don’t send someone out to inspect the condition of your home and they don’t care how old your home is.

But let’s be real. Insurance companies have to make money and they don’t do that by paying out any more claims than they really have to. So one needs to know what the exceptions to the coverage are.

I guess the bottom line is to see what customers are saying. Just do a Google search and you’ll find plenty of customer reviews for various plans. It seems that there are a lot of unhappy campers. http://www.consumeraffairs.com/insurance/am_home.html http://www.consumeraffairs.com/news04/2008/03/home_warranties.html http://www.consumeraffairs.com/homeowners/old_republic.html

Here is a link to a site by a guy who worked on the inside of one of these companies. It explains a lot. He explains how the system works. http://www.syix.com/emu/html/ahs.html

Here is a sample contract. I challenge you to read it completely and to understand exactly what you are buying, and more importantly, what you are not buying. I don’t know about you, but it makes my head hurt.

I personally have experienced these plans. I bought an older home with a 25 year old hot water heater. I thought a $400 home warranty would be a bargain because I was probabaly going to have to get the hot water heater replaced. I waited for two years before the hot water heater started to leak. It was on a Friday night. The bottom line is that the plumber they sent charged me $1350. The home warranty company paid $400 for the actual hot water heater but none of the other stuff such as disposal fees and code upgrades. With the weekend coming up and a wife and kids wanting to take showers, I wasn’t in a position to negotiate fees. I sucked it up and paid.

The next week I had a plumber over for another problem. I showed him what the other plumber had done. He said that it was probably a $900 job. That’s how much I ended up paying even after the home warranty company payed $400 for the hot water heater. I thought I could beat the system and get something for nothing but I should have known better.

Since then, I’ve read about how to beat them at their own game. I learned a lot from this post here on ActiveRain by Beverly Cohen. She says that one should be ready to take the home warranty company to court if they don’t pay. There are several big reasons why the company will probably be willing to pay you off instead of having to go to court.

Here’s another good strategy by another ActiveRain blogger, Russel Ray. He says to write them a letter demanding your money for your claim and also note that you are sending the same letter to the state insurance commissioner. He says it gets immediate results.

If you enjoy the game of trying to get paid by insurance companies, go ahead and buy one of these policies. But if you’re like me, when I have a problem, I just want it fixed and I don’t want to worry about being ripped off. I would just take that money and start your own reserve fund. Make monthly payments to it just as if you were having to pay a condo HOA fee.

Also, use a site such as Angies List or Kudzu to put together a list of good service people who you can call when something breaks down.

If you don’t have a few thousand dollars available to cover an immediate emergency, then you might want to reconsider whether or not you should actually be buying a home right now.

Is your real estate agent pushing you to use a specific lender? Maybe they even make it convenient by having an application all ready to go for you.

You might just want to cut to the chase and ask them point blank whether or not they are getting paid any money for originating your loan.

There’s a lender who is famous for his very blunt, in your face radio commercials about no closing costs loans. He acts like he’s the only one who can do such loans. It’s just a big gimmick to make the phones ring.

He had a few commercials where he was warning people that they shouldn’t rely on their real estate agent for a lender recommendation. He said that you probably wouldn’t use a lender recommended by a taxi driver. Would you? He made it sound like real estate agents were getting paid for recommending their preferred lenders, especially those who charge those evil and “unnecessary” closing costs.

I got word that he is now getting ready to try to make it worthwhile for real estate agents to send him referrals. He’s actually setting up a system that will do exactly what he was warning everyone about in his commercials.

He’s staying within the legal limits of RESPA by allowing agents to be “loan originators” by doing 6 basic minimal services in the origination of a loan. It’s very simple stuff that will take an agent a few minutes to complete. Then the agent just passes the file on to the real originator or processor and the process continues as normal. Hopefully the real originator will have the experience in the mortgage market and be able to counsel the client on the best program for their individual case.

I really don’t think many real estate agents can stay on top of both the real estate market and the mortgage market. Fortunately, I don’t think their intention is to have “double agents”. But their intention seems to be to set up a system to entice agents to steer business their way. Pretty much what the RESPA laws were meant to inhibit.

There’s nothing really wrong with it but you have to wonder about what will be sacrificed in order to have enough money to pay another person in the loop. Will they have to have higher rates? Maybe less service? I’m sure they’ll be able to make it all up on volume. Yea, that’s the ticket. Volume.

So just be aware of this. It’s always good to know everyone’s motivations.

When people have problems, they find me on the Internet and call me for my advice.

Last week a lady called me to tell me that her water had just been turned off. She said that everyone in her building seemed to have had their water turned off. I told her that maybe she should call the water department. She said that she had already done that and they said that there was an unpaid water bill. When she told me the amount I fell out of my chair.

The condo association had a past due water bill of $500,000!!!

The Camelot Club Condominium Complex has about 300 units. She said that the HOA only had 4 of the 12 positions filled. They had a management company who managed the affairs of the complex. One of their duties was to pay the water bill for the community. Water is included in the $192/month HOA fee.

I gave her the name of a good lawyer, Larry Feldman of the Roberts Law Firm. I love his motto: Don’t get mad, get even. It sounds like there’s a good lawsuit in there somewhere.

I just couldn’t believe this story. I figured it might be a big story on the TV news but I never saw anything. I’ve been searching on Google News and still didn’t find anything.

But tonight I finally found some evidence to support the story. Camelot Club Condominiums was #2 on a list of the biggest water bill deliquents in the city of Atlanta in December.

Then I saw a reference to Camelot Club Condominium Association filing for bankruptcy on January 29, 2009.

The caller said that things seemed to be going down hill over the last few years. More people renting and more foreclosures. I guess a lot of HOA dues weren’t being collected. Who knows what was being done with the dues that were collected.

I guess the lesson here is to really dig deep when doing your due diligence when buying a condo. You’re not only buying your unit, but the liabilities of the whole community.

I’ve been fortunate to have some real live buyers to work with.

One buyer was looking for a bank foreclosure deal in Cobb County. They narrowed it down to 3 choices. Before we could put an offer in on their top choice, it was already under contract. This was a $600,000 new home on a very busy street corner. I was shocked that we got beat out on it. But I actually was grateful because I didn’t really want them to buy it. Instead, we negotiated a great deal on their second choice. A bank foreclosure that was listed at $710,000 and we got it for $525,000

I’m working with one nice couple looking for a home with a pool in East Cobb or Alpharetta. They feel that while interest rates are low, it might be a good time to invest in real estate vs. the stock market. They currently own a small home and will be renting it out. I sent them a list of 15 homes, and of the 5 they chose to look at, 2 just went under contract.

I’m working with an out of town couple looking for a home that is convenient to Life College, a chiropractic school in Marietta.

I have two past clients who are now looking to buy a rental property in the north Cobb area. Every day I search the new foreclosure listings and send them the ones that look like good deals.

The bottom line seems to be that life goes on and people are still moving around. One way or another, people are finding ways to buy homes.

Many buyers are getting frustrated with trying to buy bank foreclosures or short sales. If you think that they’re a desperate seller who is willing to do anything in order to get someone to buy their homes, think again.

Banks seem to be totally under staffed in their REO departments and loss mitigation departments. I’m seeing it take four weeks before a file is even assigned to a negotiator who will open up the file and start to process it.

Then if there is one thing missing in order for them to complete their checklist of requirements, the file can then be placed at the bottom of the pile again and it might be another week or two before it gets opened up again. So it’s important to know upfront everything they will need. Even try to anticipate items that they’ll probably ask for. The game is to try to give them just enough in order for them to be able to just meet all of their guidelines.

Accept this reality and be prepared to play the game. There’s no need to get upset or frustrated at your agent. There’s really not much one can do to get them to move faster.

In multiple offer situations, being patient can pay off. While other buyers get mad and move on to another property, you can end up being the last man standing.

The word of the day when it comes to dealing with banks is PATIENCE.

There are some great deals coming onto the market everyday. I’ve seen a few first hand and sometimes I want to scream out loud for someone to come and get the deal of the year.

Unfortunately, no matter what I say to a buyer, if they don’t trust me and my experience they won’t feel comfortable pulling the buying trigger and snagging a great deal.

Unless you are in the game and looking at homes and getting a good feel for value, you probably aren’t going to trust me when I tell you that you are going to get a great deal even if you make an offer over the full asking price. You are going to think that I’m nuts for suggesting that you pay full list price in this kind of market. Then you are going to get mad at me when your low ball offer gets rejected and you miss out on the perfect deal.

Recently, I’ve seen a couple of crazy deals. A home I had listed 3 years ago for $459,000 finally went into foreclosure. The guy had it financed for about $436,000. He had it listed with a few others after my listing expired but it never sold. It was probably worth $350,000 in today’s market.

I fell off my chair when I saw that the bank listed it for $152,000. I talked with several people about what an awesome deal this was and told them that it would go for much more than the list price. But if you haven’t been looking in that market, there’s just no way that you would think about putting in an offer at $200,000.

Well, it sold this week and I saw that it went at $250,000. Someone got a great deal even though they paid $100,000 more than list price.

I had a buyer give me a call the other day who had just seen two homes and at the insistance of his agent, he put in a full price offer. He was very uncomfortable about doing this. He just didn’t trust that his agent had his best interests at heart. I suggested that he have his agent show him 10 more homes in the same area in order for him to be convinced that this was in fact a great deal and he should continue through with the contract.

I am a firm believer in “trust but verify”.

Don’t take anyone’s word for it. Don’t even trust your cousin Vinny. Don’t trust the “Christian” Realtor. Trust your own eyes. Maybe you can trust your Mom but even there, make sure she knows what’s going on in the current market.

If you’ve only seen one home and your agent wants you to jump on it, just tell him to “Show me more homes!” If you don’t have that first hand experience, you’ll be like this guy on the ground looking up at Dirty Harry asking whether or not you feel lucky.

I’ve shown homes in and around the Highland Pointe subdivision in North Cobb County over the years but never took the time to drive up Highborne Drive to the top of the mountain. I’ve always seen the line of homes going up the side of the ridge but it’s always been from a distance or looking up from the bottom of the mountain.

This past Saturday after showing a home in the lower part of the subdivision, I thought I would see how things look like from the top. What an incredible view. Homes are built on both sides of the road that runs on the ridge up to near the top where there are several cell phone towers. On the left the homes have views looking over to Kennesaw Mountain and beyond. On the right they have views over to the Stone Mountain area.

At the top is a cul-de-sac and when you turn around to come back down there is a magnificent view of the city of Atlanta staring you in the face. My little video really doesn’t do it justice.

If you are interested in looking at homes in Highland Pointe subdivision, I’d be happy to set up the appointments and show them to you.

She had called me from out of state. She sounded nice and I thought I was making progress. She wanted to find out about areas around Atlanta where she would be able to find the kind of house she desired.

I get many calls like this and have learned that I need to ask from five to ten questions in order to give them some possibilities. I’ve been in Atlanta for 23 years and have lived in several areas around town. I have been a real estate agent for 10 years and have shown homes far and wide.

Atlanta is a huge market and one agent just can’t know everything about every area. Even though I try to cover just the northern part of Atlanta, I do know what you can get in other areas around the city. I have a network of agents I refer to and I keep tabs on the general market.

She wanted a new home in a golf community, good schools, close to shopping, close to activities, basement, 4-5 bedrooms, under $300,000.

I thought about it and told her that for that price and all of those criteria, she would have to be pretty far out at the edges of the suburbs, at least in the northern part of Atlanta where I am most familiar. Maybe Forsyth county, Cherokee County, Paulding County, Hall County. It’s tough to get all of those things in the closer in suburbs. Some golf communities closer in are Indian Hills, Horseshoe Bend, Willow Springs, Rivermont, Atlanta Country Club, Country Club of the South, Sugarloaf, St. Ives. None of these are going to have any newer homes under $300,000. I know that for a fact. It’s just the way it is.

She said she found a lot of homes on my site that fit her criteria and wondered why I thought it would be tough to find what she wanted. I asked her for the towns and listing numbers for the homes she saw on the Internet but she got frustrated at my lack of knowledge and hung up on me. She said that she’d find another agent who would want to work with her and had a better knowledge of the market.

Atlanta is a huge area. Many people get excited when they find beautiful homes on the Internet but then are disappointed to find that they are pretty far out from the city or in areas that just aren’t that desirable for one reason or another.

This young lady then left me a message the next morning saying that she had found another agent who was helping her buy a home here in Atlanta that had everything she was looking for.

Then she had to stick it to me. She said that she was appalled by my lack of knowledge about what was available in Atlanta. She said that some people just aren’t cut out to be real estate agents and I might be one of them. Ouch, that hurt but it also made me laugh. I was trying to help her out and give her my honest opinion. For that she insults me?

Maybe it was some kind of miscommunication. Maybe she really meant just a swim/tennis community and not a golf community. Maybe she was talking about some other part of Georgia. I hope she finds what she wants but I have a feeling she’s going to get all excited but then find out that the homes that she wants in her price range are going to be about an hour outside of the city.

I’ve had out of state people who see Cherokee County on the map and tell me that the distance in no big deal. Then when they arrive and we begin driving out there, they begin asking “Are we there yet?” when we are just half way there.

The other thing that is happening now is that there are some homes that get put on the maket at a teaser price that’s much lower than it’s going to sell for. These homes are priced much like the starting price at an auction. If you don’t know any better, you might actually think that you can get a home for that price when in reality, those homes might end up selling for twice what the initial teaser price was.

Then there are agents who might just tell you what you want to hear. They figure they’ll get you down here and you’ll buy something one way or another. Maybe I shouldn’t be in real estate after all. I might be too honest for my own good.

It got down to 14 degrees last night. That’s pretty cold for Atlanta. Of course, it’s the major story on the evening news.

In past years, I’ve seen schools being closed due to temperature in the low teens. I grew up in Pennsylvania so that seems a little silly to me. When I was a kid, it seemed like we would have to have blizzard conditions before they would cancel school.

Someone stole my flyer box from one of my listings. That really makes me mad. I had just stocked it up with 50 flyers.

Busy weekend coming up. Two buyer clients.

Have been trying to get another client in to see a home. It’s a short sale scenario and the owner just isn’t making it easy to show. I’ve been trying to get in there for the past week.

Out of town buyer coming in to get a feel for homes in various areas around Marietta and Alpharetta. Won’t be buying until this summer. This is a long term project with the risk of no reward. But I’m happy being out looking at homes with someone. Many times someone will give me a call out of the blue and ask about a particular home that I just happened to have shown recently. When I can spout off first hand information about it, it makes me feel confident and hopefully the caller will be impressed.

There is one company who had 50% of their agents end up with zero sales last year!

With so few transactions, I’d be concerned about the first had market experience many agents have .  I’d also be concerned about agents getting desperate to make a deal work no matter what.

Before hiring an agent, you might want to ask them questions concerning those issues.